In this short video, Ben Lockwood from accounting software company Xero, takes a look at the benefits of cloud software, how this compares with desktop accounting on spreadsheets, and the time you could save by making the switch.
*Edited video transcript*
Consider what’s your why?
So, first of all, why cloud and why now? I want to stress that it’s really important to keep your reasons for your end goals, at the front of your mind throughout your project, to ensure that you don’t become sidelined. You may not be aware that there are endless benefits to moving to the cloud. Be it real-time reporting, the availability of apps or the fact that you no longer need to do any bank reconciliations.
Regardless of the benefit that stands out to you, it’s really important to acknowledge and communicate these benefits throughout your project, both with yourself to keep that focus, but also with your staff so that they’re in the loop of what’s going on. So whilst this is the first step in your journey, it certainly is something that you need to keep to the front of your mind and come back to throughout.
Benefits of cloud software
There are a whole load of benefits to cloud software. My favourite one personally is the fact that you can work in real-time and with that, the opportunities this brings you for you, your accountant, and any advisors that you have, that you have to collaborate like never before. And because everyone’s working on the same data, there is no need for backups, so no issues with backup to version control issues. The data is a single source of truth and ultimately more accurate. Open API means cloud accounting and software offers bank feeds with almost all high street banks. This allows you and your accountant to have the most up to date financial data. This combined with other data automation tools like invoice capturing software, such as hub doc, where you can take photos of receipts or scan invoices and send them directly to software such as Xero, is what’s driving efficiencies.
Another advantage is the ability to work simultaneously with collaborators, such as colleagues or your accountants in the case of Xero, that there are the added benefits of having unlimited users, which means no extra costs on purchasing extra user licenses. I remember the days myself in practice when people would be fighting over one computer to access the software. So this is a massive advantage to you. There are also no limitations as to where you can access the cloud software, providing that you have the use of the internet. You’re pretty much good to go. Much to my shame, I’ll admit that I have done accountant work sitting in a sun lounger in Spain before, which will say it really the accessibility of where the software can be accessed.
People have been talking about the paperless office for years with new technology, especially easy to use cloud-based applications, we’re closer than ever to reaching the goal. This can have many advantages for you, your employees and your business partners. Aside from the cost-saving, it gives you more flexibility to run your business from anywhere and get what you need when you need it. It also removes the hassle of having to physically store paperwork, and that can save you money at times when office space isn’t cheap. Now you can store all your business documents safely and securely in the cloud, taking no physical space up. And not only is that great for you and your workspace, but also for the environment.
Security is also a big concern for businesses in the UK and EU, with the introduction of GDPR in 2018, all personal data must now be protected. And I can’t personally speak for other software providers, but at Xero, we’ve got you covered on this. All of our systems are GDPR compliant, meaning that you never have to worry about any of your data being stolen or lost. We recently introduced multifactor authentication as well to our software, which adds an additional layer of security by checking anyone who logs in, are who they say they are. Combines your username and password with an authentication app on your smartphone or tablet. And the second layer of security is designed to prevent anyone but you from accessing your accounts, even if they have your password. All of the data at Xero is encrypted using industry-standard data encryption, multiple layers of firewalls are in place, all access to our data centres and servers are controlled and monitored. And we equally perform regular security audits to ensure that the system is fully secure.
Support is also a key factor with using cloud accountant software, with all providers having some form of a support team. Whether that be online or telephone support, as well as an array of learning materials to help you get the most out of the product. At Xero, we offer 24/7 support for all our users, meaning that whenever you are, wherever you are, there is always someone on hand to guide you through it. We also have fantastic education resources for all parts of our software, meaning that wherever you may need help in doing, we’ve got you covered on that.
Another advantage is more time to focus on your business. We hear all the time from business owners about how accounting takes large chunks of time. Using a cloud-based accounting system can give you some of that time back to spend on things that will really benefit your business. This can be through things such as bank rules to automate, to also populate large portions of your bank transactions or repeating invoices, so that you only need to produce an invoice for a service to a customer once, and then the software will do the rest of the legwork for you. As cloud accountant software products or internet-based, it would also be an oversight on my part if I didn’t mention that there are no software updates to download in the store. You’re always working on the most up to date version with access to the latest tools and features. This is in contrast to traditional desktop-based software, which often require large updates to keep the software running smoothly.
Desktop vs cloud
As you can see, there are some clear benefits to cloud accounting software, and introducing this to your business can really revolutionise the way that you work. Following on from that, this is a great illustration of some of the time savings we discussed earlier using cloud software over those traditional accounting methods. An example of this was from a business that you was previously using Sage desktop for their business. The job took on average around seven hours a month. Another thing to note is this job was being done quarterly. So not only are you decreasing the time spent but also really key thing is to note that, unlike desk software, cloud software means that the data can be kept up to date in real-time. And not only for you as the business owners to make more informed decisions, but also to keep your accounting in the loop too. This means that stakeholders will have a far greater grasp on the finances and cash flows and that can only mean great things for the business.
This business then moved onto Xero, and the job was now taking two hours a month. The business initially started using Xero purely for invoicing. And this shows that not only was it time-saving, but the job became even easier to manage for all parties. Finally, the year-end accounts production went from being filed six months following the year-end to just six weeks after because that data was so up to date.
Apps for cloud software
Another key benefit of cloud accounting software is connectivity to third party apps. In the case of Xero, you’ll find thousands of third-party apps that connect to improve business efficiency. These provide great benefits for any specific features that your business requires that is not available in Xero, or you require enhanced functionality around that area. For example, you may require a point of sale system or a niche application like property management software. There is an app for almost anything. I would suggest taking a look at the app marketplaces that are available, such as the Xero app store. Or speak to your accountant to see if there are any ones that they could suggest that could potentially benefit your business and the way that you work.
Each app has a designated page, where you can find some more information about it. Perhaps more importantly, you can read the reviews from people who have actually used the apps and see how it worked for them and benefited them.
Something that’s really invaluable when choosing the right app that works for you, is the idea behind using apps alongside your accountant software is ultimately to build an app stack. Using the potential with Xero’s app stack as an example, you can look at building an app stack. That includes, for example, some of the following, a data capture tool to capture your purchase invoices and small receipts into your accounting software. This is one of my biggest recommendations to be totally honest because it removes that need to manually enter your receipts into the software. A data tracking app to keep on top of the money owed to your business by your customers. Payment services app to make paying suppliers easier. Job management app to keep on top of projects that you have in progress. And you can sort of top that all off as well with some form of cashflow forecasting and reporting to again, to plan for the future. So you can review the past and plan for any future events that are going up.
All of these apps and the corresponding integrations of cloud accountant software are designed to make your life as a business owner, as stress-free as possible whilst helping you and your advisors make informed, accurate business decisions.
What’s next?
So now that you’ve heard from me about the main key benefits to cloud accounting, what’s next? So making tax digital is firmly on people’s minds and on the horizons too, it’s important that you ensure that your business is compliant. My suggestion here would be to speak to your accountant about the options available to you in the cloud accounting space. And they will be able to help you get started on the cloud accounting journey, and put you in the best possible position to succeed.
If you would like to contact us to discuss how we can help with setting up cloud accounting for your business, please complete the form below and a member of our team will be in touch with you soon.